Not for Distribution to U.S. Newswire Services or for Dissemination in the United States

Ithaca Energy Inc. (TSX: IAE) (LSE: IAE) ("Ithaca" or the "Company") announces its financial results for the twelve months ended 31 December 2014, together with the results of its independently assessed year-end reserves assessment and an operations update.

Highlights

Solid underlying cashflow generation despite sharp decline in oil price in the second half of 2014

Increasing production trend from improved portfolio of fields

Brent breakeven price reduced to under $10/bbl until Stella start-up with additional hedging executed in Q1-2015

Strong 2014 reserves growth -- 400% reserves replacement ratio

Substantial progress made on advancing and de-risking the Greater Stella Area ("GSA") development in 2014 -- production start-up scheduled for Q2-2016

Production of 10,947 barrels of oil equivalent per day ("boepd") in 2014 increasing to over 12,500 boepd in the first quarter of 2015 ("Q1-2015"), in line with 2015 full year guidance of 12,000 boepd

70 million barrels of oil equivalent ("MMboe") proved and probable ("2P") reserves at 31 December 2014, a 22% year on year increase -- $1,744 million net asset value discounted at 10% (independently assessed by Sproule International Limited)

Loss after tax of $25 million reflecting non-cash post-tax impairments of $173 million due to lower near term oil price assumptions

Hedging gains of $175 million in 2014 -- additional hedging taken out post year end to further strengthen future cashflows

Operating costs reduced to under $40/boe in Q1-2015, with scope for further reductions

Diversified debt capital structure established in 2014 through the issuance of $300 million five year unsecured senior notes

Full funding to Stella first hydrocarbons forecast within existing $1,010 million finance facilities -- in the process of extending the bank debt facilities to the third quarter 2018

Peak net drawn debt prior to Stella start-up anticipated to be $850 million in Q2-2015 -- $780 million forecast net drawn debt at 31 March 2015

Stella development drilling programme close to completion, with encouraging data obtained from the final Ekofisk well ahead of the clean-up flow test in April 2015

Strong alignment between all parties for delivery of Stella first hydrocarbons in Q2-2016

Les Thomas, Chief Executive Officer, commented:

"In 2014 we took significant steps to build and strengthen our business, growing production and reserves, while diversifying our debt structure. Going forward we are clearly focused on delivering the transformational Stella development, with first production expected in Q2-2016. The revised schedule reflects the significant progress made to date and is based on a plan for delivery of the FPF-1 vessel that all partners and contractors are committed to achieving and one which is underpinned by an incentive arrangement agreed between Petrofac and the Remontowa shipyard."

Production & OperationsAverage production in 2014 was 10,947 boepd, reflecting the contribution from the assets acquired from Sumitomo Corporation (the "Summit Assets") in July 2014.

Production in 2015 is forecast to average approximately 12,000 boepd (95% oil) from a broad portfolio of fields, with no individual field accounting for over 25% of total production. In Q1-2015 production is forecast to average over 12,500 boepd, in line with the 2015 full year guidance of 12,000 boepd.

The Company made good operational progress in Q1-2015 and a number of this year's key activities have been completed. Water injection on the Causeway field has commenced, the electrical submersible pump on the Fionn field is in service and production from the Pierce field is ramping up following completion of the FPSO modification works required to tie-in the third party Brynhild field. Good progress continues to be made on the Wytch Farm well workover campaign and completion operations on the Ythan production well are advancing, with start-up of the well anticipated in Q2-2015. In addition, the planned re-transfer of the Beatrice facilities to Talisman has been completed.

Greater Stella Area Development UpdateSignificant progress was made on execution of the GSA development in 2014.

The four well Stella Andrew reservoir drilling campaign was completed in the fourth quarter of the year, with the results of the clean-up flow tests performed on all the wells demonstrating a productive capacity of over 45,000 boepd (100%) and significantly de-risking the initial annualised production forecast for the field of 30,000 boepd (100%), 16,000 boepd net to Ithaca.

Completion operations are currently on-going on the fifth and final development well on the Stella field, in the Ekofisk chalk reservoir. A 2,137 foot gross horizontal reservoir section has been drilled and completed, with the well intersecting a net reservoir interval of 2,073 feet, (97% net pay) and extensive natural fractures along the entire length. The planned clean-up flow test on the well is expected to commence in early April 2015 and once completed, the ENSCO 100 drilling rig will be demobilised from the field, marking the end of the Stella field development drilling campaign.

Good progress was made during 2014 on the execution of various subsea infrastructure installation activities. The overall subsea installation programme is more than 80% complete. Technip is scheduled to recommence installation operations in April 2015 and over a number of planned offshore campaigns, is set to close out the remaining installation activities in the third quarter of this year.

As previously announced, while substantial progress was made during 2014 on the FPF-1 modification programme, the sail-away of the vessel from the Remontowa yard in Poland is now planned for late in the first quarter of 2016, with first hydrocarbons from the Stella field forecast in the second quarter of the year. This revised FPF-1 sail-away schedule reflects the fact that over 75% of the construction works have been finished, productivity in the yard is understood and the rate of progress has been established. The process for handover of vessel sub-systems for pre-commissioning has commenced and this progress, along with Petrofac's agreement with the Remontowa yard of an incentivised mechanical completion schedule, provides added confidence in the timeline for completion of the remaining modification works.

FinancialsOperating ExpenditureIn 2014 underlying unit operating costs were $49/boe2. This rate has fallen to under $40/boe in Q1-2015 and is expected to fall further prior to the start-up of production from the Stella field. The reduction in unit costs is being driven by the removal from the portfolio of the Beatrice field, the implementation of a revised Athena FPSO contract in June 2015 and other savings being realised through supply chain cost reductions, contract renegotiations and the removal of overheads. Looking further ahead, the addition of low cost Stella production is forecast to push unit operating expenditure below $30/boe in 2016.

HedgingThe Company has increased its oil hedging protection since the start of the year in order to mitigate against the impact of further Brent price weakness.

At the start of 2015 the Company had in place oil price hedges of approximately 6,300 barrels of oil per day for the period from January 2015 to June 2016 at an average price of $102/bbl. In Q1-2015 the Company increased this position to 8,300 barrels of oil per day ("bopd") at an average price of $91/bbl. Additionally, 4,000 bopd has been hedged at an average price of $69/bbl from July 2016 to June 2017.

The Company took the opportunity to accelerate the receipt of the cash benefits of a portion of the accumulated hedging gains in Q1-2015, increasing the realised gain in Q1-2015 by $60 million to approximately $80 million.

Ithaca's updated oil hedge position post Q1-2015 after taking account of the price impact of the value acceleration is summarised as follows: 9,000 bopd hedged at an average $76/bbl from April 2015 to June 2016, with the volumes and prices for the period July 2016 to June 2017 unchanged (4,000 bopd at an average price of $69/bbl).

With the benefit of the additional hedges that have been executed since the start of the year, the Company now has a Brent breakeven price for the existing producing asset base of under $10/bbl until Stella start-up, in addition to having received an $80 million cash gain in Q1-2015.

Capital ExpenditureAs previously announced, 2015 capital expenditure is forecast to total approximately $150 million, a near 60% reduction compared to the previous year. The investment programme is heavily weighted towards the early part of the year, with approximately $75 million of capital expenditure planned for Q1-2015, driven by the on-going Stella Ekofisk and Ythan drilling operations. Once these wells are completed, the majority of the remaining expenditure will be incurred over the summer as the subsea infrastructure installation programme is completed.

The 2015 capital expenditure programme is forecast to be fully funded on an annual basis by operating cashflows generated from the Company's producing asset portfolio, based on current Brent oil prices and reflecting the benefit of the oil price hedges that have been executed and anticipated operating costs for the year.

TaxThe Company had a UK tax allowances pool of $1,496 million at 31 December 2014. At current commodity prices, the pool is forecast to shelter the Company from the payment of corporation tax until after 2020. Following utilisation of the tax allowances, the Company will benefit from the reduction in the North Sea Supplementary Corporation Tax rate recently announced by the UK government. More immediately the Company will benefit from the announced reduction in the Petroleum Revenue Tax rate from 50% to 35%, applicable from the start of 2016, on its interest in the Wytch Farm field.

Peak Debt & FundingDuring 2014 the Company established a more diversified debt capital structure for the business with the issuance of $300 million of five year senior unsecured notes ("Senior Notes"). The Company has total debt facilities of $1,010 million in place (excluding the Norwegian tax rebate facility), comprised of a $610 million reserves based lending ("RBL") facility, $100 million corporate facility and the Senior Notes.

Peak net drawn debt prior to the start-up of production from the Stella field is anticipated to be around $850 million, occurring in Q2-2015. Net drawn debt at the end of Q1-2015 is forecast to be approximately $780 million (excluding the Norwegian tax rebate facility), up from $763 million at the end of 2014.

The Company is in the process of extending its RBL facility to a standard tenor that will better synchronise its duration with the revised Stella start-up schedule. The extension is expected to be closed out along with the scheduled semi-annual borrowing base review in Q2-2015.

Year-End ReservesTotal proved and probable ("2P") reserves at 31 December 2014 were 70 MMboe, as independently assessed by Sproule International Limited, a 22% increase on the previous year. The Company's change in year-end reserves was driven higher by the addition of the Summit Assets and the positive impact of portfolio changes outweighing negative revisions associated with lower future oil and gas price assumptions. The corresponding post-tax net asset value discounted at 10% was $1,744 million, 5% higher than the previous year as the addition of the Summit Assets and portfolio changes more than offset the value realised from production in 2014 and the impact of the reduction in value associated with lower oil and gas price assumptions.

2014 Financial Results Conference CallA presentation to analysts of the financial results will be held today in London commencing at 12.00 BST (07.00 EST). Listen to the call live via the Company's website (www.ithacaenergy.com) or alternatively dial-in on one of the following telephone numbers and request access to the Ithaca Energy conference call: UK +44 203 059 8125; Canada +1 855 287 9927; US +1 866 796 1569. A short presentation to accompany the results will be available on the Company's website prior to the call.

Notes1. Underlying cashflow from operations excludes a Q3-2014 $12 million charge pertaining to a late 2013 Sullom Voe Terminal ("SVT") reconciliation charge and a downwards non-cash oil stock revaluation of $16.3 million, both of which are included in the financial statement reported cashflow from operations of $153.2 million.
2. The underlying unit operating cost calculation excludes the late 2013 SVT charge and is net of forex gains and other income (Nigg cost contribution).

The audited consolidated financial statements of the Company for the twelve month period ended 31 December 2014, the related Management's Discussion and Analysis and Annual Information Form are available on the Company's website (www.ithacaenergy.com) and on SEDAR (www.sedar.com). All values in this release and the Company's financial disclosures are in US dollars, unless otherwise stated.

In accordance with AIM Guidelines, John Horsburgh, BSc (Hons) Geophysics (Edinburgh), MSc Petroleum Geology (Aberdeen) and Subsurface Manager at Ithaca is the qualified person that has reviewed the technical information contained in this press release. Mr Horsburgh has over 15 years operating experience in the upstream oil and gas industry.

References herein to barrels of oil equivalent ("boe") are derived by converting gas to oil in the ratio of six thousand cubic feet ("Mcf") of gas to one barrel ("bbl") of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1 bbl, utilising a conversion ratio at 6 Mcf: 1 bbl may be misleading as an indication of value.

About Ithaca EnergyIthaca Energy Inc. (TSX: IAE) (LSE: IAE) is a North Sea oil and gas operator focused on the delivery of lower risk growth through the appraisal and development of UK undeveloped discoveries, the exploitation of its existing UK producing asset portfolio and a Norwegian exploration and appraisal business targeting the generation of discoveries capable of monetisation prior to development. Ithaca's strategy is centred on generating sustainable long term shareholder value by building a highly profitable 25kboe/d North Sea oil and gas company. For further information please consult the Company's website www.ithacaenergy.com.

Forward-looking statementsSome of the statements and information in this press release are forward-looking. Forward-looking statements and forward-looking information (collectively, "forward-looking statements") are based on the Company's internal expectations, estimates, projections, assumptions and beliefs as at the date of such statements or information, including, among other things, assumptions with respect to production, drilling, construction times, well completion times, risks associated with operations, future capital expenditures, continued availability of financing for future capital expenditures, future acquisitions and cash flow. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. When used in this press release, the words and phrases like "anticipate", "continue", "estimate", "expect", "may", "will", "project", "plan", "should", "believe", "could", "target", "in the process of" and similar expressions, and the negatives thereof, whether used in connection with operational activities, Stella first hydrocarbons, drilling plans, production forecasts, budgetary figures, anticipated net drawn debt, anticipated extension of bank debt facilities, potential developments or otherwise, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations, or the assumptions underlying these expectations, will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These forward-looking statements speak only as of the date of this press release. Ithaca Energy Inc. expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based except as required by applicable securities laws.

Statements relating to "reserves" are by their nature deemed to be forward-looking statements, as they involve the implied assessment based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future.

This press release contains non-International Financial Reporting Standards ("IFRS") industry benchmarks and terms, such as "cashflow from operations", "cashflow per share" and "net drawn debt". These terms do not have any standardised meanings within IFRS and therefore are unlikely to be comparable to similar measures presented by other companies. The Company uses cashflow from operations to help evaluate its performance. As an indicator of the Company's performance, cashflow from operations should not be considered as an alternative to, or more meaningful than, net cash from operating activities as determined in accordance with IFRS. The Company considers cashflow from operations to be a key measure as it demonstrates the Company's underlying ability to generate the cash necessary to fund operations and support activities related to its major assets. Cashflow from operations is determined by adding back changes in non-cash operating working capital to cash from operating activities. The Company uses net drawn debt as a measure to assess its financial position. Net drawn debt includes amounts outstanding under the Company's debt facilities and senior notes, less cash and cash equivalents. Net drawn debt noted above excludes any amounts outstanding under the Norwegian tax rebate facility.

Additional information on these and other factors that could affect Ithaca's operations and financial results are included in the Company's Management's Discussion and Analysis for the year ended December 31, 2014, and the Company's Annual Information Form for the year ended December 31, 2014 and in reports which are on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

This information is provided by RNS
The company news service from the London Stock Exchange